Shares of Hexaware Technologies returned to Dalal Street on Wednesday, with the software services exporter listing at around 5 per cent gains on the NSE and then rallying further.
The Mumbai-based technology company used to be a listed entity. Promoter Atul Nishar sold it to private equity firm Barings Asia in 2013, which later took it private. Hexaware was acquired by Carlyle in 2021 and the private equity giant has now made it public again. Raising around ₹8,750 crore through the public listing, this was the largest IPO by an Indian software services company to date.
The Hexaware IPO was fully an offer for sale (OFS), where CA Magnum Holdings, part of the Carlyle Group, pared its stake in the company to 74.1 per cent from 95.03 per cent.
Shares of the company were listed at ₹745.50 on the NSE, versus its issue price of ₹708 and went on to hit a high of ₹778.40 in intraday trading.
Hexaware’s public float comes in the backdrop of the software services industry having gone through uncertain times over the past 12-18 months, with clients, especially in major markets like the US, cutting back on some spending amid a slowing economy and high inflation. While discretionary demand was beginning to see a pickup in recent quarters, Donald Trump’s return as the President of the United States has also added to uncertainties around trade and immigration policies.
Through the four years of delisting (2020-2024), Hexaware saw a 14 per cent compounded annual growth in US dollar revenue, putting it in a "select cohort of scaled yet nimble mid-tier IT services firms," said analysts at JM Financial Institutional Securities.
From a longer perspective, Hexaware outpaced most peers with a 12.5 per cent compounded annual growth in dollar revenue over 2013-2023, the analysts noted.
They expect Hexaware’s dollar revenue to grow at 12 per cent compounded annually over 2024-2027, while margins are also likely to expand 170 basis points over the same period.
"At the core of Hexaware’s consistent growth and successful diversification efforts has been its 'land, ramp and expand' go-to-market strategy. Hexaware has directed its hunting (or land) efforts towards larger, scalable accounts. Its focus on select but large verticals has helped expand the go-to-logos," said the JM Financial analysts.
From the NSE listing ceremony | NSE
According to analysts at Mirae Asset Sharekhan, Hexaware has a diversified revenue mix in terms of verticals.
"The company’s outlook is promising as it is well placed to capture AI-embedded digital transformational and optimisation opportunities through its proprietary platforms, RapidX, Tensai, and Amaze in the medium to long term, driven by tailwinds such as accelerated cloud adoption, increasing enterprise use of data and AI, heightened cybersecurity needs, the drive for cost optimisation, and the trend towards transforming operating models with integrated platforms," said the Sharekhan analysts.
It is estimated that global enterprise technology services spending will grow at 4.6 per cent CAGR touching close to $4.11 trillion by 2029 from $3.28 trillion in 2024.
Hexaware is centred around AI and serves a diverse range of customers, including 31 of the Fortune 500 companies, according to analysts at SBI Securities. Long-term and embedded relationships with a diversified blue-chip customer base; AI-led digital capabilities; global, scalable and flexible delivery model with a certified and skilled talent pool are some of its key highlights, the analysts added.
